THE POLITICAL ECONOMY OF INTERNATIONAL TRADE, David Kennedy, James Southwick, eds., Cambridge University Press, 2002

Abstract:
There has been a dramatic shift in the focus of trade policy concerns in recent years from the barriers that lie at the border to the barriers which exist “within the border.” The General Agreement on Tariffs and Trade/World Trade Organization (GATI/WTO) and other regional trading arrangements have been largely successful in reducing both the levels of tariffs worldwide and the scale of other border measures such as quotas. This has revealed a new and more subtle category of measures which restrict trade – the numerous regulations which governments enact to protect the health and safety of their citizens and the environment in which they live.The efforts to protect citizens from the hazards of everyday life have become a virtual minefield for trade policy makers, in part because such differences can often be manipulated or exploited to protect domestic industry from international competition, and in part because even when there is no protectionist intent on the part of lawmakers, through a lack of coordination, mere differences in regulatory or standard-setting regimes can function to impede trade through increasing multiple

compliance costs. It has thus become increasingly difficult to delineate the boundaries between a nation’s sovereign right to regulate and its obligation to the international trading community not to restrict trade.In this paper we argue for a relatively deferential form of review of domestic health and safety regulations by the WTO Dispute Settlement Body that keys on certain minimum objectively verifiable characteristics of the regulatory process (which we characterize as form and process review, rather than substantive review) and that seeks to achieve an acceptable balance between the objectives of screening out regulatory protectionism and allowing substantial domestic policy autonomy to respond to domestic consumer risk preferences. In striking this balance, standards of review and burdens of proof are critical to decisional outcomes, given the scientific uncertainty that attends many health and safety risks and idiosyncratic consumer preferences towards different kinds of risks. We believe that our approach is consistent with the core provisions of the WTO SPS Agreement and is largely, but not entirely, consistent with the approach taken by the WTO Appellate Body in the three decisions that it has rendered under the SPS Agreement to date.